Making the Grade: The CEO Guide to Executive Education
January 24 2012 by CJ Prince
By 2002, five-year-old smartphone maker HTC was already proving itself a force with which to be reckoned. First to market with palm-sized PCs in 1999 and 2000, the startup was about to release the first Microsoft-based wireless smartphone. But, though he was encouraged by the company’s hypergrowth, cofounder and CEO David Chou was also worried about the future. He knew he had the engineering skills and the entrepreneurial vision to make HTC a major player in the smartphone market, but he was concerned that he lacked the business savvy—management, strategy, finance, and the like—to take the company to the next level.
Twice, Chou enrolled in executive management programs, first at Cambridge University in the U.K., and then at Stanford Business School. Both times he backed out, unable to tear himself away from the office. Finally, in 2006, Chou’s concern about the future outweighed his worry about leaving the day-to-day business. “We had this great company,” Chou recalls. “I thought, I don’t want to destroy it because I’m not capable of managing it.” So he enrolled in Harvard Business School’s advanced management program, which, at eight weeks, was a significant time commitment for a busy entrepreneur. But Chou told himself he would be able to answer emails and participate in phone conferences and even fly back two or three times during the program to visit headquarters in Taiwan. “The first day, I realized that would be almost impossible. We had a lot of cases to read and discuss and prepare and I realized I couldn’t go back to the office three times. I needed to completely focus on what I was doing there.”
The sacrifice was worth it, Chou says. He returned with a broader perspective, fresh insight gleaned from fellow executives and a few clear action items. For one example, Chou immediately fired his entire board, having realized that they did not understand the business and were not adding the critical knowledge and judgment HTC needed. It was a bold move—one Chou likely would not have taken before. “I had much more confidence in myself in terms of running the company and I really understood what I should be doing as a CEO,” he says. Chou has since grown HTC to be the third-largest smartphone manufacturer worldwide.
Chou admits that had he been facing the same choice in 2008, when the market was freefalling and the economy recessing, he likely would not have taken the plunge. And indeed, business schools’ executive education programs felt the pinch as companies pulled way back on spending and, running leaner, were reluctant to let employees take time off to go back to school. “Both open enrollment and custom were hit pretty hard across the whole industry at the tail end of 2008,” says David Newkirk, CEO of executive education at the Darden School of Business. But business schools have grown more bullish on their numbers. According to a survey early last year by the International University Consortium for Executive Education (UNICON), 65 percent of member B-schools expected increased open enrollment this year and 78 percent projected an increase in custom programs.
The Center for Creative Leadership (CCL), a nonprofit that focuses on leadership training, reported revenue was up 22 percent in 2010 and expects 2011 to be a record year. The biggest bump in CCL’s open enrollment has been its Leadership at the Peak program, designed specifically for C-suite and other senior executives and held in both Colorado Springs and Davos, with another planned for Singapore in May. “C-suite executives are saying to us, ‘This is a complex world, I can’t hit the pause button, I have to get better, I have to be able to communicate with stakeholders and be able to drive my strategy,’” says John Ryan, president of CCL.
While custom is up at CCL, at most traditional schools, custom programs have had a tougher time coming out of the recession. David Yoffie, senior associate dean and chair of executive education at Harvard Business School, attributes only part of that to continued belt-tightening, noting that there has also been a bit of a strategic shift. “Five years ago, the perception was that the future of executive education was custom programs designed for individual companies. What we’ve seen in the last five years is that open enrollment programs have had the most robust and stable demand.” At Harvard, for example, open enrollment has grown 50 percent over the past five years, while the custom business has stayed flat. Companies are recognizing the benefit of having their executives interact and learn from executives from other companies, industries and geographies, he says. “There is enormous value in participating in a broader network, beyond just your own people talking to each other.”
At the same time, companies are still seeking the personalized attention of a custom program, which has led to the inclusion of more custom elements, such as coaching, in open enrollment, says Yoffi. Ryan points out that CCL has seen its best year for coaching yet. Wharton has also made changes to its open-enrollment program, having added new courses based on feedback from corporate clients who need help exploring new core competencies such as customer focus, innovation leadership and cooperation across boundaries, to name a few.
Dartmouth’s Tuck School of Business created a hybrid offering that allows four to six companies across industries that share a common view on leadership development to come together for a more customized program that also offers the classroom diversity of open enrollment. “Because it’s only four to six companies, the professors and coaches can prepare specifically for those companies and tailor the courses to their issues,” says Clark Callahan, executive director of Tuck’s executive education program.
One example is the Global Leadership 2030 Consortium, which recently convened executives from Colgate-Palmolive, Corning, Deere & Co., and Rolls Royce to learn how to compete successfully in the global marketplace. The course includes one week at Tuck’s Hanover, N.H. campus; one week in Chennai, India and one week in Shanghai. The school has considered developing a similar program for companies along the supply chain; the consortia might include a commercial airline, a jet supplier, a turbine company, a security firm, a provider of inflight food and beverage and on down the line. “That would be interesting because they share strategic challenges, but it’s incredibly complex to put together,” says Callahan. “We had the idea, but so far we haven’t done it.”
What’s the ROI?
Measuring ROI on big-ticket purchases has always been important to the efficient organization, but in the wake of the recession, hunkered-down companies have become that much more insistent that dollars be wisely spent. While skills-based training benefits can be tracked and measured, quantifying the return on big-picture, strategic learning is as challenging as ever. “Executive education is about learning new tools, frameworks, ways to think about the business and the global economy. That’s not something you can test at the end of a chapter,” says Rochelle Weichman, associate dean for executive education at MIT Sloan.
Even if one suspects that a program may have helped ready a senior executive for the next big task, it’s nearly impossible to trace a direct line. When Callahan talks about ROI with CEO clients, he uses the analogy of the strategic radar screen. Every CEO has a list of big, strategic issues and challenges he or she would like to tackle in the next three, six or eighteen months. “When the CEO sends someone to us, he or she is looking for us to help ready that person to address a particular issue on the radar screen. So the question is, three months later, six months later, is it clear that we helped with that issue or not?”
Increasingly, companies that send executives to open-enrollment programs are sending them with very specific goals, challenges they are expected to solve while they’re away, says Dr. Jason Wingard, vice dean of executive education at Wharton. “In the past it was: Broaden their perspectives, give them new knowledge, best practices, tools to use in the field. Now it’s much more: Do all that, but also get something done while you’re here that’s going to impact our P&L or our bottom line this fiscal year.”
Executives arrive at Wharton with several significant business challenges their companies need to address. When they leave, they are expected to bring back keen insights, new thought leadership and, most importantly, solutions to those problems. For open enrollment, the more focused the company’s objectives for the executive, the easier it is to measure results. In custom corporate programs, metrics for evaluating return can be embedded upfront, says Wingard. “We are very clear in the design phase about what they’re hoping to achieve, how soon post-program they want to achieve them, and in what form. Then we can be thought partners together and be very clear before we even design the program about what we want to measure on the other end,” he says.
One area in which companies have had a relatively easy time justifying education spend is in succession planning, whether it’s preparing a candidate for the CEO office or readying a middle manager for a C-suite role. Darden, for example, has a program for controllers who have their eye on the CFO job and need a more sophisticated financial view of the firm, a better understanding of the strategic questions that need to be asked in the boardroom and the sort of leadership and communication skills necessary to head up the financial group, explains Newkirk. “If you want to move from being a bean counter to being the financial voice in the boardroom, that’s a whole different set of skills.”
The same approach works for potential CEO successors. Michael DeCola has been CEO of Mississippi Lime Company, a 100-year-old manufacturer of high-calcium lime products, for the past 12 years. Recently, he and his board had begun thinking seriously about his successor. They identified one high-potential candidate, but felt that individual needed to broaden his perspective and develop some additional skills he lacked for the job. “More important than that even was the opportunity to get away and interact with other high-level executives and think about the kind of leader he wanted to become,” says DeCola. A Darden alum, DeCola sent the candidate to Darden’s executive education program.
“It gave him a chance to see how all the pieces fit together,” DeCola says. “He came back with a respect for people in other functions and a conceptual framework to be able to diagnose problems, think about a broad range of alternatives to solving the problem and get to the right answer and implement it.” Shortly after that, the executive, William Ayers, was named president and COO of the company. DeCola says he views executive education in general as a good way to test the mettle of high-potential candidates and determine whether they are ready to move up. “If someone came to the program and struggled, didn’t do well or found it boring, it would tell me this person is not ready to move on to a higher leadership role.”
p>Both for open enrollment and custom programs, executive education leaders say their schools are taking more of a partnership approach, listening to feedback from clients and constantly evolving their programs to meet those needs. MIT’s Weichman says CEOs may not realize how flexible schools are to help with a specific request. “I would say, talk to us. Many of us have degrees of freedom in terms of designing a program or putting together a combination of open enrollment and customized work that could fit the company’s need well.”
For most U.S. CEOs of companies both large and small, the question is not whether to conduct business in China, but when and how. This question is even more relevant today as China assumes its place as a leading force in the global recovery. But significant cultural, political and economic challenges abound, threatening the viability of any U.S. leader’s global strategy. Fortunately, B-schools studying both the challenges and the opportunities in the burgeoning Far East have created a wide range of programs to help senior executives develop and execute their strategies for penetrating and expanding in emerging markets. Here are just a few offerings from the top schools in 2012:
• “Building Businesses in Emerging Markets” • Harvard Business School • April 23-27, 2012 • $9,000
This five-day intensive held at the HBS campus is designed to help senior executives of regional or multinational companies explore untapped opportunity in emerging markets, analyze business model options and develop a comprehensive strategy for sustainable growth. Participants from around the country and the globe, including CEOs, COOs and other operations and business development executives, learn through a mix of classroom presentations, workshops and case discussions.
• “Building the Business: Strategies for Asia Pacific” • INSEAD • May 21-25, 2012 and Nov. 19-23, 2012 • SGD 11,800
A five-day program held in Singapore, this course offers participants an opportunity to develop their strategic managerial skills in Asia while building a cross-industry, international network. Through lectures, work groups and discussions, participants explore a host of topics, including the socio-political environment, building human capital and expanding through acquisitions and joint ventures.
• “Global Business Strategy: China” • Columbia Business School and Cheung Kong Graduate School of Business • August 8-10, 2012 • $6,750
Designed specifically for senior executives of multinational companies that wish to compete and cooperate successfully in China, this three-day partnership program, hosted at Columbia’s New York City campus, brings faculty from both schools as well as Chinese government officials, Chinese CEOs and other company professionals to offer insights on Chinese economic development. Participants will leave the program knowing how to position China within their company and understand the intricacies of the country’s policies and economy.
• “Global CEO Program: A Transformational Journey” • IESE Business School, The Wharton School and The China Europe International Business School (CEIBS) • Nov. 2012, March 2013 and June, 2013 • $39,000
For those able to devote more time, an alliance among these three top schools offers an immersive three-week experience on three continents, geared to CEOs, business owners, board members and other C-suite executives. A diverse group of participants spend one week each in Sao Paulo, Philadelphia and Shanghai with the objectives of deepening their knowledge of global market dynamics and honing their leadership skills in a global context. Through discussions with faculty experts and peers, participants gain insights into the latest models and frameworks for understanding business problems and specific strategies for identifying new opportunities and capitalizing on them.
A Blend of High and Low Tech
With companies still struggling to keep costs low in the post-recession economy, technology that allows busy executives to receive top-quality training without leaving their offices would seem a grand idea. But even if the videoconferencing technology and necessary bandwidth were ubiquitously available around the globe (which they aren’t), leaders in executive education say e-learning will likely never replace the face-to-face experience.
“Schools invested millions of dollars many years ago thinking distance learning was effective and necessary and they lost millions of dollars because it didn’t work the way people anticipated,” says Rochelle Weichman, associate dean for executive education at MIT Sloan. Even at MIT, where technology is a key focus, e-learning platforms are viewed as an extension of in-class learning. A virtual classroom doesn’t allow for the sort of easy exchange of ideas and networking that face-to-face programs offer, adds Weichman. “We still believe that person-to- person contact in a room, in plenary with faculty and each other, is the best way to really create change and learn.”
But much-improved technology is enhancing executive education in a variety of ways. For starters, it helps with pre-program prep. Harvard Business School uses online tutorials to get executives up to speed on basic skills and required background before they arrive on campus. Once on board, they can view business cases via the iPad and Kindle and a host of other multimedia via mobile devices. “We have our own app,” says David Yoffie, senior associate dean and chair of executive education at Harvard Business School.
Social media is also helping students stay connected, both during the program and after. Harvard Business School uses Facebook and LinkedIn to keep students in touch during breaks from its modular long courses. At Duke, students can use Twitter to share insights and data. MIT’s Media Lab has created a name badge with digital chip that tracks how many people participants interact with, who they are and how long the interaction lasts. This proved illuminating for participants, who can see whether their view of their own networking capabilities measures up to reality.
“It’s interesting to see whether or not people think it reflects them the way they expected,” says Weichman, who adds that while technology can prove invaluable for skills-based training, executive-level learning isn’t as easy to quantify and standardize. “Executive education is about learning new tools, frameworks, ways to think about the business and global economy,” says Weichman. “That’s not something you can test at the end of a chapter.”